23rd May, 2019
Just because the $30,000 Instant Asset Write-Off is available, doesn’t mean eligible small business owners have the available cash to make the most of it ahead of EOFY. But there is a workaround.
The Instant Asset Write-Off has been a temporary source of relief for eligible small business owners for several years now, and it shows no sign of disappearing just yet.
Under the scheme, eligible businesses with annual turnover of up to $50 million can write off the depreciation of eligible equipment purchases up to $30,000.
As an incentive, the Instant Asset Write-Off is effective encouragement for small business owners to invest in new kit like IT hardware, vehicles, tools and office furniture.
While the Instant Asset Write-Off has always been pitched as a temporary incentive, it’s continued to remain in play since it was first introduced in 2011. But it’s changed significantly over that period.
In its earliest iterations, the incentive was only available for purchases totalling less than $1,000. But then in 2016 we saw a significant increase as it jumped to $20,000. And it was at this stage that the Instant Asset Write-Off became big news for Australia’s SMEs.
And the 2019 Federal Budget in April promised to increase the threshold to $30,000 if passed into law.
There’s just one problem: not all startups and SMEs have enough cash in the bank to enable purchases of this size and they’re missing out on valuable tax savings as a result.
But there is an alternative.
New options for borrowing money are offering a way to turn this situation on its head, so that business owners can receive the cash injection they need in a very short turnaround time.
Recent research found that, around 15 percent of borrowers were using the service to purchase new equipment.
This growing trend demonstrates the strength of this new option for small business finance, and it appears to be supported by the Government as well.
In 2018, the Morrison Government introduced a $2 billion Australian Business Securitisation Fund, which essentially provided an alternative source of funding for eligible fintech lenders.
Is this the way of the future for small business finance? If you’re in need of new equipment but currently strapped for cash, at least it may be the future of finance for your small business.